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 Business Issues, Competition
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José Manuel Guaita Martínez, PhD
and Rosa Puertas Medina, PhD
Editors

Digitalization in Business
On the Road to a Sustainable World
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Contents

Preface .......................................................................................... vii

Chapter 1 Analysis of the Efficiency of Digitalization
in European Union Countries ...........................................1
José Manuel Guaita Martínez
and Rosa Puertas Medina
Chapter 2 Digitalization in EU Companies:
Challenges and Evolution ...............................................29
Juan J. Lull, Roberto Cervelló-Royo
and Carlos Devece
Chapter 3 Digitalization through ICT Innovation:
Analysis of the Impact of Factors
on R&D Investment Decisions
of Technological Companies ...........................................55
Inna Alexeeva Alexeev
and Cristina Mazas Pérez-Oleaga
Chapter 4 The Key Role of Digitalization and European
Clusters as Innovation Ecosystems, and Their
Implication in the Successful International
Promotion of the Member Companies in the
Strategic Chinese Sectors: Net-Zero and Smart
Cities, Smart Ports and Smart Factories .......................95
Beatriz Irún, Paloma Moya,
Diego Monferrer, Miguel Ángel Moliner
and Enrique Bayonne
Chapter 5 Digitalization and Its Effect on the Gender
Gap in the Technology Job Market .............................145
Luisa Marti and Consuelo Calafat
vi Contents

Chapter 6 Women Tech Hub: Supporting Females

to Accelerate the Digitalization
of Their Start-Ups in Georgia.......................................167
Berrbizne Urzelai, Patricia Carracedo
and Avtandili Mghebrishvili
Chapter 7 Blockchain Applications in the Digitization
Processes of the Tourism Sector ...................................193
Juan F. Prados-Castillo, Eva R. Porras
and Jose María Martín Martín
Chapter 8 Social Attitude towards P2P Digital
Tourism Platforms: Is the Long-Term
Sustainability of Mass Tourism Threatened? .............223
María José Ruiz Martos
and Francisco Javier Sáez Fernández
Chapter 9 The Challenges of Digitalization in Public
Administration. Case Study: Customs as an
Example of Digital Transformation
with the Aim of Facilitating Trade ...............................253
Sonia Iborra Gómez
Chapter 10 Museology 4.0. A New Paradigm Arises
from the Integration of Digital Strategies
and Metaverse in Museums ..........................................289
Ana Martí Testón
Chapter 11 Digitalization and Business in Marketing
with a Purpose................................................................317
Raquel Ayestarán
Editors’ Contact Information ..................................................................345
Index .........................................................................................347
Preface

In recent decades, all sectors of society and the economy have been forced to
adapt to the continuous advances of the digital age. These new technologies
are bringing about changes in how we communicate, work and even live,
offering opportunities to face future challenges. The concept of digitalization
is a fundamental part of the economic catharsis of the 21st century.
The book presented here captures some aspects of this great
transformation, revealing how digitalization impacts all levels of society and
the economy. The need for innovation, the efficiency of its implementation,
the effects on tourism and trade, its implementation in culture, and the possible
gender gap associated with its development, are crucial elements analyzed in
the chapters that make up this book. The results will provide evidence that
decision-makers can use to achieve a homogeneous evolution of this great
transformation, guaranteeing the success of the measures adopted.
Chapter 1

Analysis of the Efficiency of Digitalization

in European Union Countries

José Manuel Guaita Martínez, PhD

and Rosa Puertas Medina, PhD
Department of Economic and Social Sciences,
Universitat Politècnica de València, Valencia, Spain

Abstract

The advance of digitalization has brought to light the pressing need to

adapt to new technologies that are permeating into all socioeconomic
strata. Humanity has no choice; it must adjust in order to survive.
Digitalization is shaping all facets of society, education, health, business
activities, consumer behavior, and so on. It is a process that has become
the driving force of globalization, helping to break down barriers and
reduce distances between nations. The acceptance and assimilation of
digitalization bring with it important changes, in which training the
population plays a relevant role. Businesses require a trained workforce
to ensure the correct use of these new technologies and maximize their
usefulness, guaranteeing firms a key differentiating position in world
markets.
This research involves a detailed study of the situation in Europe,
analyzing the efficiency of digital resources in four western EU countries
that are the European gateway to trade with Africa—namely, Portugal,
Spain, France and Italy— over a seven-year period (2014-2020).
Regarding the methodology, variants of data envelopment analysis
(DEA) are used to carry out an exhaustive analysis of all the stages of the
process; specifically, DEA-Bootstrap, the Malmquist Index and non-


Corresponding Author’s Email: [email protected].

In: Digitalization in Business

Editors: José Manuel Guaita Martínez and Rosa Puertas Medina
ISBN: 979-8-88697-275-7
© 2022 Nova Science Publishers, Inc.
2 José Manuel Guaita Martínez and Rosa Puertas Medina

concave metafrontiers. Based on the results, a number of important

conclusions have been drawn that can help decision-makers when
developing investment policies: (1) digitalization is not found to be even
across all territories; (2) countries have targeted their efforts at
introducing technological advances, disregarding the improvements in
efficiency that could be achieved through more training for society, (3)
regions in France are adapting best to this new situation, while Italy is
the least efficient. These days, the level of digitalization conditions
economic growth and even the sustainable development of humanity;
hence, there is a need to achieve homogeneous implementation of these
emerging, cutting-edge technologies.

Keywords: Western European Union, digitalization, data envelopment

analysis, efficiency, Malmquist index

Introduction

The terms digital transformation, digitization and digitalization are sometimes

used interchangeably to define innovative technologies, overlooking the
distinctions between them (Caputo et al., 2021). They all describe a
transformative new way of conducting economic and social relations that
minimizes cultural barriers (Mugge et al., 2020). A literature addressing these
concepts has emerged in recent years, in which the perspective of digital
change focused on specific business disciplines has given way to a
multidisciplinary issue affecting all socioeconomic strata (Schallmo and
Williams, 2018; Verhoef et al., 2021).
In the business field, digital transformation, also called digitalization 4.0,
ensures flexible business models and accurate analyses grounded in data
science. It represents the key to bolstering competitiveness, improving
procedures and securing a position in international markets (Llopis-Albert et
al., 2021). The connection with the other terms (digitization and digitalization)
hinges on the fact that its implementation requires organizational changes
made through digitalization projects (Warner and Wäger, 2019). It is a
continuous process that involves the use of artificial intelligence, blockchain,
internet of things (IoT) and even mobile telephony in order for companies to
optimize their performance while improving the service offered to customers.
The distinction between digitization and digitalization is even harder to
pin down, since some languages such as Spanish, German or Japanese do not
distinguish between the two (Vrana and Singh, 2021). The first term is defined
 Analysis of the Efficiency of Digitalization in European Union Countries 3

as the transformation of analogue information into digital information,

whereas digitalization is a much broader concept involving the integration of
digitized information into a socioeconomic context, simplifying daily
operations (Bloomberg, 2018). Despite these nuanced differences, however,
the two notions are closely related: both digital transformation and
digitalization require digital information to guarantee the success of their
implementation. The nexus between the three has contributed to the
achievement of previously unimaginable advances in education (Komarova et
al., 2022), tourism (Xiang, 2018), healthcare (Lapão, 2019), industry
(Papadopoulos et al., 2022) and, above all, trade relations (Katz et al., 2020;
Hope and Campbell, 2021).
In short, the process leading to the worldwide digitalization of the
economy and society requires the implementation of new technologies that
facilitate not only access to information but also connectivity between all
available services. It is about being able to offer people a general-purpose
technology that facilitates even their daily activities, while being compatible
with ethical and sustainability principles (Matt et al., 2022). COVID-19 has
changed society's priorities, underscoring the importance of the digital age and
the need to achieve homogeneous development across all countries to ensure
the safety of the population (Amankwah-Amoah et al., 2021). Against this
backdrop, the present research seeks to provide quantitative evidence on the
current level of digital progress by assessing the situation in this regard of four
European countries—Portugal, Spain, France and Italy—in the period 2014-
2020. Specifically, a regional analysis is conducted to provide answers to the
following research questions:

Q1. Is there a clear difference between regions in terms of the efficiency

of digitalization in the analyzed countries?
Q2. Have there been any improvements during the period analyzed? What
is the source of these improvements?
Q3. Is there a technology gap between the analyzed countries?

These questions will be answered using variants of data envelopment

analysis (DEA); specifically, intertemporal DEA-Bootstrap, the sequential
Malmquist Index (MI) and a non-concave metafrontier. These methods are
used to provide concise answers to each question, in order to gain an
understanding of the situation and guide future technological investment
measures that guarantee uniform digital development and ensure the
connectivity of society. DEA has been used to analyze the effects of
4 José Manuel Guaita Martínez and Rosa Puertas Medina

digitalization in different areas such as banking (Ekinci, 2021), energy (Zhao

et al., 2021), culture (Raimo et al., 2021), the agri-food industry (Annosi et al.,
2020), as well as to assess the relative efficiency of the digital transformation
in the EU (Inel, 2019) or in developing countries (Gebre-Mariam and Bygstad,
2019). This research helps to fill the gap in the literature by offering a detailed
regional analysis of the progress achieved, from various perspectives, yielding
accurate information on the current situation. Specifically, this study makes
the following contributions: (1) the regional perspective enables policies to be
focused on the territories that are lagging behind; (2) the length of the period
of analysis allows an assessment of the development achieved over the
economic cycle, presenting evidence on aspects to be improved; (3) the
intertemporal analysis prevents possible outliers from affecting the results; (4)
the identification of a technology gap allows the modeling of a pattern to be
followed by the other regions; (5) the recency of the period under study means
policymakers can draw conclusions based on the current state of the issue, thus
providing a useful decision-making tool.
The rest of the chapter is structured into the following sections. Section 2
presents the framework for the study carried out. Section 3 presents the
methods and the sample used in the empirical analysis. Section 4 discusses the
results that provide answers to the questions raised. Finally, section 5
summarizes the main conclusions of the research and its possible limitations.

Framework of EU Digitalization

In order for digitalization to be consolidated, digital technologies must be

incorporated into the everyday life of society and organizations; these
instruments must be used daily and the user must perceive them to be useful.
This a key factor in countries' economic growth (Yuan et al., 2021). Industry
4.0, conceived of as a combination of new technologies integrated into all
levels of the economy, has accelerated digitalization (Han et al., 2021). It is a
new approach in a scenario where companies and customers interact with each
other in real time, and its implementation is improving supply chains,
transforming products and market expectations. Lioutas et al. (2021) show that
digitalization has social, cultural, political and environmental effects, and is
even a suitable instrument for tackling food problems.
In this context, the impact on the labor market has not taken long to
materialize; new skills are required to address the needs that the use of these
 Analysis of the Efficiency of Digitalization in European Union Countries 5

emergent technologies entails (Fromhold-Eisebith et al., 2021). Seeking to

address possible deficiencies, the European Commission has coined the term
Industry 5.0 as a complement to the notions implicit in Industry 4.0, with the
idea that industrial development should promote both economic growth and
sustainable practices (European Commission, 2021a). Industry 5.0 shines a
light on the importance of the human factor, emphasizing that technology
should serve people and not vice versa. The digital transformation, aimed at
both automation and providing answers to consumers' diverse demands, also
requires a consideration of the possible link between the role of workers and
the new digital techniques (Kumar et al., 2021).
This know-how is permeating into people’s homes, triggering important
changes in ways of living and working. However, the proper implementation
of digitalization requires specific digital skills, which facilitate the execution
of innovative processes in businesses. In 2021, the EU established Europe's
Digital Compass, the content of which is centered around four key points that
translate into objectives to be achieved in the decade to 2030 (European
Commission, 2021b):

1. Ensuring that the percentage of European citizens lacking digital

skills does not exceed 20%; the currently figure is 42%. This will
entail promoting the training of specialists in information and
communication technology (ICT).
2. Installing secure, performant and sustainable digital infrastructures to
ensure the connectivity of all households. One aim is for European
semiconductor production to account for 20% of global production.
3. Promoting the digital transformation of businesses, with the aim of
three out of four using digital models.
4. Achieving the total digitalization of public services.

In order to unify positions, in January 2022 the European Commission

proposed a project on digital rights and principles (European Commission,
2022). The stated priority in this declaration is that people should be placed at
the center of the process, while at the same time incentivizing innovative
companies. According to the published document, the digital transformation
of the EU “should encompass digital sovereignty, inclusion, equality,
sustainability, resilience, security, trust, improving quality of life, respect of
people’s rights and aspirations and should contribute to a dynamic, resource-
efficient and fair economy and society in the Union.”
6 José Manuel Guaita Martínez and Rosa Puertas Medina

The scientific community's notable research output on the analysis of

digitalization in EU member countries is unprecedented. For example,
Grigorescu et al. (2021) analyze the possible correlation between the well-
being of the population and digitalization, demonstrating that the advances
achieved translate into greater satisfaction for citizens. The desired efficient
competitiveness will only be within reach of those businesses that have
definitively opted for digitalization; indeed, it is one of the most influential
factors in competitiveness in European countries, second only to
macroeconomic stability (Boikova et al., 2021). Furthermore, it has been
shown that digital technologies are changing the movement of people and
goods through different territories, with the consequent energy and
environmental impact. Noussan and Tagliapietra (2020) evaluate the effect on
energy consumption of digitalization in transport, determining the variability
range of this effect in a future scenario between 2030 and 2050.
All these changes have been accelerated by COVID-19, revealing existing
weaknesses and highlighting the need to update procedures at all levels
(Chopra et al., 2022). These unprecedented activities are here to stay; they
have transformed the way of working, learning, socializing, and buying and
selling goods and services of all kinds (Cone et al., 2021; Polycronidou et al.,
2021; Wang et al., 2021; Guaita et al., 2022). According to Elmassah and
Hassanein (2022), the pandemic has hastened the implementation of digital
technologies to facilitate the organization of work, falling into a loop of
socioeconomic costs and opportunities that require special attention. Efforts
must be made to ensure work-life balance for workers. In this regard, Nell et
al. (2021) point out that the benefits of digitalization sometimes have
unintended effects on the organizational design of companies, empowering
senior managers and giving them the ability to intervene in even the most
routine operations.
However, this macro revolution will not be possible without the financing
to support the necessary changes. In the period 2016-2022 alone, the EU has
allocated 192 million euros to finance the digital transformation of agriculture,
and has also had to maintain and expand the budget allocated to the
modernization of society and businesses. In parallel, the NextGenerationEU
program, developed to mitigate the economic effects of COVID-19, is based
around four cross-cutting goals: ecological transition, digital transformation,
social and territorial cohesion, and gender equality. It is a recovery plan
involving the investment 750 billion euros (2018 prices), aimed not only at
stimulating the economy but also at achieving a more ecological, digital and
resilient Europe (European Commission, 2021c). Balsmeier and Woerter
 Analysis of the Efficiency of Digitalization in European Union Countries 7

(2019) have found evidence of the positive effect of such investment on the
employment of highly qualified people. Furthermore, according to Eller et al.
(2020), more intense digitalization boosts financial performance as long as it
is accompanied by more employee training and a proper digital strategy.

Methods and Materials

We provide answers to the proposed research questions by carrying out an

empirical analysis of the regions of four western EU countries, covering a
seven-year period (2014-2020) that incorporates the possible effect of the
pandemic. Specifically, the sample is made up of 7 regions in Portugal, 19 in
Spain, 22 in France and 21 in Italy. The research takes an intertemporal
approach, which helps to ensure the robustness of the results (Bresciani et al.,
2021; Puertas et al., 2022). The methods used are supported by ample
literature in which DEA-Bootstrap and the MI have been used to address
issues relating to climate change mitigation (Puertas and Marti, 2021), the
implementation of innovative processes in Europe (Carracedo and Puertas,
2022) and even in assessments related to water (García-Mollá et al., 2021; de
Castro-Pardo et al., 2022). On the other hand, metafrontiers have been
successfully used to identify the technology gap in various productive sectors
such as energy (Yu et al., 2019), the shadow price of carbon (Shen et al., 2021),
irrigation infrastructures (Bravo-Ureta et al., 2020), and the water-energy
nexus (Ding et al., 2020), among others.

Methods

DEA-Bootstrap, MI and Non-Concave Metafrontier

DEA is a non-parametric technique used to calculate the efficiency of
homogeneous decision units (DMUs) defined by the same inputs and outputs.
DEA identifies the optimal combinations of factors used to generate the
desired quantity of output, thus defining an efficient frontier. The distance
from this frontier represents the degree of inefficiency. Charnes et al. (1978)
defined the DEA model under the assumption of constant returns to scale
(CCR model); that is, supposing proportional changes in inputs and outputs.
Responding to the need to make the model more flexible, Banker et al. (1984)
proposed the introduction of variable returns to scale (BCC model) in order to
8 José Manuel Guaita Martínez and Rosa Puertas Medina

be able to account for and assess the possible inefficiencies caused by

inappropriate size. The definition of the BCC model allows for two
orientations: an input-oriented model, where the aim is to minimize the
resources used to obtain the desired output; and an output-oriented model,
where the aim is to maximize the output obtained with the available inputs.
The choice of orientation depends on the requirements of the problem posed.
The popularity of this method is mainly due to the ability to examine the
multiple aspects that characterize the observations of the sample, and the
flexibility of not having a pre-established functional form. However, the
results are strongly conditioned by the choice of inputs and outputs, and there
is no test to determine their appropriacy.1
This research uses DEA-Bootstrap, where the optimization procedure is
performed iteratively yielding more accurate results. It was suggested by
Simar and Wilson (2007) as a way of increasing the initial number of
observations and correcting certain dimensionality problems (Simar and
Zelenyuk, 2011). The corrected efficiency levels and confidence intervals are
calculated through a data-generating process; specifically, 2000 iterations
have been performed. Depending on the orientation of the problem posed, the
results have different bounds. The analysis has been carried out under the BCC
approach, with an output orientation, such that those DMUs scoring a value of
1 are completely efficient, and an amount over 1 represents how much the
outputs need to increase by to reach the frontier. In addition, the analysis is of
an intertemporal nature, involving the calculation of country-specific efficient
frontiers covering the entire study period. This makes it possible to look for
similarities between regions in the same country. If a frontier were calculated
for each country and year, the results would not be comparable, even if they
belonged to the same country (Puertas et al., 2020). Therefore, each region is
evaluated in comparison with the rest of the observations that make up the
sample, without differentiating by time. In this way, the efficiency level of
each DMU is calculated as the mean of the efficiency achieved in the years
corresponding to the analyzed period.
Changes in productivity have been calculated using the sequential MI. It
was originally proposed by Caves et al. (1982), with Färe et al. (1989) later
suggesting the decomposition into changes in technical efficiency (EC) and
changes in technology (TC), depending on the source of the change. Its
measurement involves identifying changes in the use of inputs and outputs by

1
All efficiency calculations were done using the deaR statistical package implemented in
Rstudio (Coll et al., 2018).
 Analysis of the Efficiency of Digitalization in European Union Countries 9

DMUs, relative to the efficient frontier, between two sequential moments in

time, t and t + 1. Again, either an input or an output orientation can be adopted,
and the results are not bounded: values below 1 represent productivity losses,
while values above 1 indicate the progress achieved. In this study, sequential
MI is calculated to avoid having to consider technological regress when values
of less than 1 are obtained for TC (Tulkens and Eeckaut, 1995). Therefore,
innovation is viewed as additive in nature, with it being possible to obtain
values equal to 1 when no technological advances have been made, or higher
than 1, where the amount over 1 represents the innovation achieved during the
analyzed period.
Finally, in order to answer the third research question, the metafrontier is
used to determine which territory best manages digitalization, in turn
achieving higher levels of efficiency. Originally proposed by Hayami (1969)
and Hayami and Ruttan (1970, 1971), it can be estimated under a stochastic
approach (Battese and Rao, 2002; Battesse et al., 2004) or a non-parametric
one (Eguchi et al., 2021; Chang and Tovar, 2021), with the latter being the one
that has become most popular. It consists of calculating an efficient frontier
for each country as well as a global one that envelops them all. Thus, the
following calculation must be performed for each observation:

• The distance to its own frontier (TEk). This determines the level of
efficiency of each observation in comparison with the DMUs from
the same country.
• The distance to the envelope frontier, called the metafrontier (TE). It
constitutes the level of efficiency in relation to the group of countries
considered.
• The ratio between TE and TEk formalizes the ratio that determines
the technology gap with respect to the best positioned (TGR).

𝑇𝐸𝑖 (𝑥,𝑦)
𝑇𝐺𝑅𝑖 = (1)
𝑇𝐸𝑖𝑘 (𝑥 𝑘 ,𝑦 𝑘 )

where TEi (x, y) represents the technical efficiency of DMU i calculated with
respect to the metafrontier; TEik (xk , y k ) the efficiency of DMU i in group k to
which it belongs; and TGRi is the Technology Gap Ratio. According to
O'Donnell et al. (2008) this ratio provides valuable information by allowing
the TE components to be analyzed individually.

𝑇𝐸𝑖 (𝑥, 𝑦) = 𝑇𝐸𝑖𝑘 (𝑥 𝑘 , 𝑦 𝑘 ) · 𝑇𝐺𝑅𝑖 (2)

10 José Manuel Guaita Martínez and Rosa Puertas Medina

Therefore, equation (2) shows that the technical efficiency of each DMU
with respect to the metafrontier (TE) is composed of the level of efficiency
achieved within its group (TEk) and the distance between the group-specific
frontier and the metafrontier, that is, the gap that exists as a result of the way
the activity is managed (TGR).
The curve of the individual frontiers means the metafrontier encompasses
combinations of input and outputs that could not possibly occur in the
analyzed sample, with this area forming a triangle known as the "infeasible
input-output combinations" (O'Donnell et al., 2008; Tiedemann et al., 2011).
Accordingly, in this study we estimate a non-concave metafrontier in order to
perfectly fit the frontier to the profile of possible efficient combinations (Sala-
Garrido et al., 2011).

Materials

The efficient frontiers calculated to answer the research questions have been
constructed based on the resources and products representative of the
digitalization of the analyzed regions. Table 1 defines the 3 inputs and 5
outputs used in the empirical analysis, all of which have been extracted from
the Eurostat database.

Table 1. Variables used for the DEA techniques applied (%)

Variable Role Definition

Internet input Households with internet access
Broadband input Households with broadband access
Frequency input Frequency of internet access: once a week
Networks output Creating user profile, posting messages, Facebook, Twitter, etc.
Authorities output Using the internet for interaction with public authorities
Purchase output Last online purchase: in the 12 months
Selling output Selling goods and services
Banking output Internet banking
Source: Own elaboration.

The use of these variables is supported by a robust literature,

demonstrating their suitability for assessing digitalization performance
(Ekinci, 2021; Yalçin, 2021; European Commission, 2021d). The different
DEA models proposed have been defined in an output-oriented BCC setting,
meaning the aim is to maximize the output with the available resources. Table
 Analysis of the Efficiency of Digitalization in European Union Countries 11

2 shows the descriptive statistics of all the variables corresponding to the mean
of the regions in Spain, Portugal, France and Italy.

Table 2. Descriptive statistics of the analyzed countries (2014-2020)

Internet Broadband Frequency Networks Authorities Purchase Selling Banking

Spain
Mean 84.29 83.58 79.90 55.28 53.11 48.44 11.30 45.96
SD 7.47 7.98 7.45 6.65 6.59 10.31 3.15 10.18
Max 99 99 94 78 71 71 28 75
Min 67 62 64 40 42 25 3 27
Nº 133 133 133 133 133 133 133 133
obs.
Portugal
Mean 75.94 74.16 69.47 56.12 40.73 34.88 7.82 33.39
SD 8.70 8.46 7.11 6.96 7.27 6.78 2.04 9.32
Max 91 89 84 67 61 52 13 56
Min 54 53 55 41 32 21 5 20
Nº 49 49 49 49 49 49 49 49
obs.
France
Mean 85.74 78.20 82.59 40.03 67.16 66.19 25.12 61.30
SD 5.28 5.39 4.75 5.21 7.39 5.75 4.81 6.31
Max 95 92 91 54 82 78 37 74
Min 58 57 59 13 43 48 4 35
Nº 154 154 154 154 154 154 154 154
obs.
Italy
Mean 80.27 78.71 68.57 41.96 24.93 33.23 8.65 31.71
SD 6.78 6.87 8.10 5.15 5.55 10.06 2.44 9.85
Max 93 93 85 56 41 55 17 55
Min 63 61 48 31 14 10 3 13
Nº 147 147 147 147 147 147 147 147
obs.
Source: Own elaboration.

These results show a clear differentiation between the countries analyzed.

In Spain, Portugal and Italy, broadband is widespread, in that almost all
individuals with internet access have broadband, whereas in France there is a
difference of more than 7 percentage points. In Spain, the maximum values of
the three inputs considered are close to 100%, with these figures being slightly
lower in the other countries, while the minimum values are around 55%-65%.
All this shows that these new technologies, despite the difficulties involved in
their development and adaptation, are reaching every home. However, the
level of outputs shows the need to provide the population with more training
12 José Manuel Guaita Martínez and Rosa Puertas Medina

to boost the uptake of these new technologies to deal with day-to-day tasks,
an issue closely related to the problem of the digitalization of the elderly.
Despite the available resources, there are still regions in Spain where the use
of internet banking and online buying or selling barely exceed 23%, 25% and
3%, respectively, with similar results found in the other countries.

Result and Discussion

Q1. Is there a clear difference between regions in terms of the efficiency

of digitalization in the analyzed countries?

Answering this question requires the estimation of the intertemporal

DEA-Bootstrap, constructing a country-specific efficient frontier from
regional statistical information covering the seven years of the analyzed
period. Although it is not possible to make comparisons between countries in
terms of efficiency levels achieved as they have different efficient frontiers,
the results will be very useful for determining whether there are some regions
that are lagging behind in terms of digitalization. The columns of Table 3 show
the mean efficiency values (EFF_level mean) and the standard deviation
(EFF_level SD). In addition, the regions have been grouped by zones in order
to provide a more consistent view across countries.
As shown in Table 3, we do not observe a homogeneous pattern in the
analyzed countries, except in France, where on average the regions of the three
zones need only increase their outputs by 5% to be completely efficient,
showing an even performance across the entire country (Q1). In Spain, the
North and Centre regions reveal very similar levels of efficiency (1.090 and
1.093, respectively), with the figure rising to 1.121 in the South and Islands.
However, in Portugal and Italy it is the Centre that shows the best performance
followed by the South and then the North. For example, in the North in Italy,
output could be increased by more than 10% using the available resources.
This analysis provides quantitative data on the level of digitalization of the
different regions, which can help guide investment efforts towards the areas
that are lagging behind, such as Southern Spain, Northern Italy or Northern
Portugal.
 Table 3. Regional efficiency levels estimated using DEA-Bootstrap (2014-2020)

SPAIN ITALY FRANCE PORTUGAL

DMU EFF_ EFF_ DMU EFF_ EFF_ DMU EFF_ EFF_ DMU EFF_ EFF_
level mean level SD level mean level SD level mean level SD level mean level SD
NORTH
Galicia 1.091 0.033 Piemonte 1.108 0.049 Île de France 1.050 0.022 Norte 1.072 0.039
Asturias 1.121 0.055 Valle d'Aosta 1.059 0.011 Alsace 1.056 0.033
Cantabria 1.104 0.060 Liguria 1.119 0.072 Champagne- 1.042 0.021
Ardenne
País Vasco 1.089 0.030 Lombardia 1.115 0.033 Lorraine 1.068 0.032
Navarra 1.064 0.031 P.A. Bolzano 1.137 0.057 Picardie 1.052 0.035
La Rioja 1.119 0.070 P.A. Trento 1.072 0.031 Basse-Normandie 1.079 0.050
Aragón 1.079 0.034 Veneto 1.134 0.065 Haute-Normandie 1.033 0.012
Cataluña 1.051 0.022 Friuli-Venezia 1.106 0.055 Nord-Pas-de- 1.040 0.026
Giulia Calais
Emilia- 1.104 0.049 Bretagne 1.051 1.051
Romagna
Mean 1.090 0.042 Mean 1.106 0.047 Mean 1.052 0.143 Mean 1.072 0.039
CENTRE
C. Madrid 1.058 0.027 Toscana 1.054 0.030 Centre - Val de 1.085 0.031 Centro 1.039 0.020
Loire
Castilla y León 1.123 0.044 Umbria 1.075 0.041 Bourgogne 1.047 0.023 Á.M. de 1.026 0.005
Lisboa
Castilla- 1.107 0.044 Marche 1.083 0.044 Poitou-Charentes 1.038 0.034 Alentejo 1.031 0.013
Mancha
 Table 3. (Continued)

SPAIN ITALY FRANCE PORTUGAL

DMU EFF_ EFF_ DMU EFF_ EFF_ DMU EFF_ EFF_ DMU EFF_ EFF_
level mean level SD level mean level SD level mean level SD level mean level SD
CENTRE
Extremadura 1.075 0.039 Lazio 1.066 0.047 Pays-de-la-Loire 1.050 0.026
C. Valenciana 1.100 0.034 Abruzzo 1.092 0.045 Franche-Comté 1.050 0.024
Molise 1.059 0.030 Limousin 1.047 0.028
Rhône-Alpes 1.035 0.022
Auvergne 1.084 0.059
Mean 1.093 0.037 Mean 1.072 0.040 Mean 1.054 0.143 Mean 1.032 0.039
SOUTH AND ISLANDS
Illes Balears 1.058 0.036 Campania 1.088 0.037 Aquitaine 1.044 0.031 Algarve 1.056 0.030
Andalucía 1.106 0.047 Puglia 1.112 0.054 Languedoc- 1.052 0.036 R.A. dos 1.049 0.036
Roussillon Açores
Murcia 1.168 0.037 Basilicata 1.068 0.038 Midi-Pyrénées 1.037 0.027 R.A. 1.054 0.037
Madeira
Ceuta 1.081 0.037 Calabria 1.096 0.050 Provence-Alpes- 1.069 0.016
Côte d'Azur
Ciudad de 1.148 0.129 Sicilia 1.069 0.043 Corse 1.060 0.054
Melilla
Canarias 1.166 0.070 Sardegna 1.059 0.038
Mean 1.121 0.060 Mean 1.082 0.043 Mean 1.052 0.033 Mean 1.053 0.035
Source: Own elaboration.
 Analysis of the Efficiency of Digitalization in European Union Countries 15

The need to achieve proper digitalization in all countries lies in its proven
contribution to economic growth (Godwin et al., 2020) and to the improve-
ment of labor productivity in businesses (Cette et al., 2021). However, it has
not yet been possible to decouple said growth from energy consumption (Ren
et al., 2021). Although ICT represents a tool that can be used to boost energy
efficiency, the sector itself is fairly energy intensive, sparking much debate in
the scientific community, where there is widespread support for global
sustainable development (Lange et al., 2020). Previous studies conducted have
focused on the sample countries: Portugal, seeking to clarify the role of local
authorities in digital transformations (Rodrigues and Franco, 2021); Spain,
reporting evidence of the link between employment and digitalization (Enciso-
Santocildes et al., 2021); Italy, assessing digital platforms targeted at business
process management, showing the improved performance of the sea-land
supply chain, as well as interorganizational relationships (Di Vaio and
Varriale, 2020); and France, examining the relationships between
digitalization and worker autonomy (Zeshan et al., 2021). Therefore, they are
countries where digitalization is necessary to guarantee an appropriate
socioeconomic development throughout the territory.

Q2. Have there been any improvements during the period analyzed?
What is the source of these improvements?

The sequential MI is used to provide evidence on the progress of

digitalization, enabling an assessment of the appropriacy of the measures
adopted over these seven years in terms of improvements in productivity, and
identifying the source of said improvements. Table 4 shows the results of the
MI and its two components: TC, change derived from improvements in
technology, that is, innovation; and EC, change resulting from advances in
efficiency. Again, the regions have been grouped by geographical location to
enable a comparative analysis between countries.
Table 4 shows that over the seven-year period, all regions have increased
the productivity of their digital resources, although not always homo-
geneously, nor do we see a constant correlation with the efficiency levels
shown in Table 2 (Q2). For example, in all the Spanish regions, productivity
has increased on average by around 2.5%, the source of which is advances in
innovation (TC) not progress in efficiency (EC). Specifically, the South and
Islands should raise their outputs by more than 12%, as shown in Table 2;
however, they have failed to increase EC (EC<1), devoting all their resources
to the introduction of innovation to improve services (TC>1). Something
16 José Manuel Guaita Martínez and Rosa Puertas Medina

similar happens in France and Italy; again the increases in the MI are due to
the introduction of advanced technologies (TC>1).
Portugal merits special mention: the Centre regions of the country have
registered developments of more than 3% (MI), unlike the North, where the
corresponding figure is just 1.7% (MI). That said, the Portuguese regions are
the only ones to have directed efforts towards EC, although the resulting
improvements are very slight (0.2% and 0.9% in the South and North,
respectively). For its part, France has managed to transfer its even efficiency
levels to improvements in productivity, with these being homogeneous
throughout the country. On average, all French regions show increases of just
above 1% (MI).
In short, the common feature in all countries is the overall disregard for
EC, which in general registers no progress at all, and at best reaches 0.9%.
This finding represents evidence of the need for decision-makers to promote
training for citizens, facilitating their immersion in the use of these
technologies, which could translate into progress in efficiency.
The scientific community has shown that the productivity gains from
digitalization can be converted into improvements in supply chains. For
example, Loske and Klumpp (2020) find evidence of the positive effect caused
by the progress of digitalization on transport logistics over the years. Paulet
and Mavoori (2020) identify the importance of new technologies for banking
performance and the degree of bank customer satisfaction. Furthermore, Chen
(2019) demonstrates that e-commerce performance contributes to the
reduction of carbon emissions in the hotel industry. However, as confirmed by
the results obtained, all these technological changes must be accompanied by
appropriate training of citizens, requiring a socioeconomic revolution to take
hold in all sectors. According to Kleinert (2021), this movement is lagging
because society is not yet aware of how quickly these technologies are
advancing.
Q3. Is there a technology gap between the analyzed countries?
Before calculating the metafrontier, it is necessary to determine whether
there are significant differences between the four countries analyzed. Due to
the non-normality of the variables, the Kruskal-Wallis test has been chosen for
this purpose (Kruskal and Wallis, 1952). The null hypothesis to be tested is
that k samples have been drawn from the same population; it can be accepted
if the p-value is greater than 0.05. The alternative hypothesis is that the
samples come from different populations, that is, they are significantly
different.
 Table 4. Results for changes in productivity: Sequential MI (2014-2020)

SPAIN ITALY FRANCE PORTUGAL

Regions MI TC EC Regions MI TC EC Regions MI TC EC Regions MI TC EC
NORTH
Galicia 1.015 1.034 0.981 Piemonte 1.022 1.032 0.99 Île de France 1.013 1.016 0.997 Norte 1.017 1.008 1.009
Asturias 1.024 1.022 1.002 Valle d'Aosta 1.067 1.067 1 Alsace 1.02 1.014 1.006
Cantabria 1.015 1.034 0.981 Liguria 1.037 1.042 0.996 Champagne-Ardenne 1.002 1.012 0.99
País Vasco 1.023 1.032 0.992 Lombardia 1.037 1.041 0.996 Lorraine 1.002 1.009 0.993
Navarra 1.04 1.044 0.997 P.A. Bolzano 0.999 1.014 0.985 Picardie 1.02 1.016 1.004
La Rioja 1.013 1.019 0.994 P.A. Trento 1.039 1.026 1.013 Basse-Normandie 1.002 1.008 0.994
Aragón 1.008 1.022 0.986 Veneto 1.003 1.01 0.993 Haute-Normandie 1.011 1.011 1
Cataluña 1.032 1.032 1 Friuli-Venezia 1.021 1.012 1.009 Nord-Pas-de-Calais 1.01 1.01 1
Giulia
Emilia- 0.997 1.013 0.985 Bretagne 1.007 1.01 0.996
Romagna
Mean 1.021 1.03 0.991 Mean 1.025 1.028 0.996 Mean 1.01 1.012 0.998 Mean 1.017 1.008 1.009
CENTRE
Madrid 1.033 1.033 1 Toscana 0.998 1.012 0.986 Centre - Val de Loire 1.002 1.011 0.991 Centro 1.018 1.018 1
Castilla y León 1.02 1.021 0.999 Umbria 1 1.011 0.99 Bourgogne 1.01 1.016 0.994 Á.M. 1.04 1.04 1
Lisboa
Castilla-la 1.019 1.036 0.984 Marche 1.015 1.022 0.993 Poitou-Charentes 1.011 1.011 1 Alentejo 1.034 1.035 0.999
Mancha
Extremadura 1.01 1.021 0.989 Lazio 1.03 1.03 1 Pays-de-la-Loire 1.008 1.009 0.999
C. Valenciana 1.015 1.027 0.989 Abruzzo 1.042 1.042 1 Franche-Comté 1.015 1.021 0.994
 Table 4. (Continued)

SPAIN ITALY FRANCE PORTUGAL

Regions MI TC EC Regions MI TC EC Regions MI TC EC Regions MI TC EC
CENTRE
Molise 1.027 1.036 0.991 Limousin 1.028 1.028 1
Rhône-Alpes 1.012 1.014 0.998
Auvergne 1.019 1.015 1.005
Mean 1.02 1.028 0.992 Mean 1.019 1.025 0.993 Mean 1.013 1.016 0.998 Mean 1.031 1.031 1
SOUTH AND ISLANDS
Illes Balears 1.029 1.029 0.999 Campania 1.019 1.029 0.99 Aquitaine 1.016 1.016 1 Algarve 1.031 1.023 1.008
Andalucía 1.003 1.025 0.979 Puglia 1.036 1.033 1.002 Languedoc- 1.008 1.014 0.995 R.A. dos 1.017 1.017 1
Roussillon Açores
Murcia 1 1.016 0.984 Basilicata 1.031 1.029 1.001 Midi-Pyrénées 1.017 1.012 1.005 R.A. Madeira 1.015 1.016 1
Ceuta 1.062 1.088 0.976 Calabria 1.014 1.021 0.993 Provence-Alpes- 1.011 1.017 0.994
Côte d'Azur
Melilla 1.018 1.019 0.999 Sicilia 1.014 1.019 0.994 Corse 1.035 1.035 1
Canarias 1.012 1.036 0.977 Sardegna 1.008 1.019 0.99
Mean 1.021 1.036 0.986 Mean 1.02 1.025 0.995 Mean 1.017 1.018 0.999 Mean 1.021 1.019 1.002

SPAIN 1.021 1.031 0.99 ITALY 1.022 1.027 0.995 FRANCE 1.013 1.015 0.998 PORTUGAL 1.025 1.022 1.002
Source: Own elaboration.
 Analysis of the Efficiency of Digitalization in European Union Countries 19

Table 5. Kruskal-Wallis test for Spain, Portugal, France and Italy

chi-squared p-value
Internet access at home 83.092 0.000
Broadband access 55.202 0.000
Frequency of internet access 230.612 0.000
Participating in social networks 289.424 0.000
Interaction with public authorities 408.628 0.000
Online purchases 344.982 0.000
Selling goods or services 334.416 0.000
Internet banking 318.325 0.000
Source: Own elaboration.

A Kruskal-Wallis test has been performed for each of the variables used
to define the efficient frontier. As can be seen in Table 5, the p-value of all
variables is less than 0.05, meaning we can reject the null hypothesis and
confirm that there are statistically significant differences between the four
countries. This conclusion enables the construction of a metafrontier; in other
words, it is confirmed that the regions in Spain, Portugal, France and Italy
operate under different technological frontiers. Table 6 shows the efficiency
results calculated relative to each country (TEk) and to the metafrontier (TE)
and the technology gap ratio (TGR), all of which have been calculated as the
mean of the levels achieved by the regions of each country. It also includes
descriptive statistics and the percentage of efficient regions.
The analysis of Table 6 requires an assessment of the differences between
TEk and TE. According to TEk, the Portuguese regions need only increase
their outputs by an average of 2.9% to be efficient; next comes France, then
Italy, and lastly Spain. It can also be seen that the percentage of regions located
at the frontier follows this same order of countries, as does the standard
deviation (SD). The SD shows that the variability of the results is lower in the
Portuguese regions, regardless of the setting for the calculation, TEk or TE.
Overall, these results get worse when analyzing the distance with respect
to the envelope frontier (TE), except in France, where the value registered for
TEk holds. TE allows comparisons between countries: it is a single frontier
that envelops the regions of the four countries. In this case, France is the most
efficient (3.6%), followed by Portugal (3.7%), Spain (7.5%) and Italy (17.2%).
It can also be seen that the number of efficient regions drops sharply, except
in France, which remains constant.
20 José Manuel Guaita Martínez and Rosa Puertas Medina

Table 6. Non-concave metafrontier (2014-2020)1

Mean SD Min Max Efficient (%)

SPAIN
TEK 1.072 0.060 1 1.305 16.54%
TE 1.075 0.061 1 1.305 15.79%
TGR 1.003 0.013 1 1.087
ITALY
TEK 1.064 0.052 1 1.213 19.73%
TE 1.172 0.107 1 1.481 13.61%
TGR 1.102 0.082 1 1.305
FRANCE
TEK 1.036 0.036 1 1.165 28.57%
TE 1.036 0.036 1 1.165 28.57%
TGR 1 0 1 1
PORTUGAL
TEK 1.029 0.034 1 1.120 34.69%
TE 1.037 0.034 1 1.120 22.45%
TGR 1.008 0.021 1 1.093
Source: Own elaboration.

TGR has been calculated from the values of TEk and TE. This ratio
measures the distance between the frontier of country k and the metafrontier;
that is, the technology gap. As can be seen in Table 6, its value ranges from 1
to 1.102. France registers the maximum level of efficiency, where all regions
have obtained a TGR equal to 1, that is, they are on the metafrontier. Using
the available inputs, the French regions have produced the maximum possible
output, indicating that their way of managing digitalization is the most
appropriate. At the opposite extreme is Italy (Q3). If the Italian regions
adopted the technology of the French regions, they could increase their output
by 10.2%. Second place is held by Spain (0.3%), closely followed by Portugal
(0.9%).
The implementation of digitalization at the national level requires an
appropriate management of resources to minimize the possible associated
problems. At the business level, Jasińska (2021) shows that in order to adapt
organizations to Industry 4.0, strategies should focus on detecting business
opportunities that improve performance, and subsequently implementing the
necessary innovation. The digitalization process needs to take into account

1
The results of the mean efficiency by group do not coincide with those shown in Table 2
because, in this case, given the complexity of the analysis and the objective of the research
question, DEA-Bootstrap has not been applied.
 Analysis of the Efficiency of Digitalization in European Union Countries 21

aspects of strategy, leadership, culture, people, governance and technology

(da Costa et al., 2019).

Conclusion

Globalization implies the connection of all countries in the world,

guaranteeing the movement of people, products and services. This requires the
implementation of innovative technologies that minimize distances and enable
the real-time provision of solutions. It is in this scenario that digitalization is
gaining ground, providing major opportunities for growth. Its implementation
entails change at all levels of society, where the mere use of mobile devices is
facilitating communication and collaboration in real time, cost savings and
optimization of daily decision-making. These new technologies break down
barriers by bringing knowledge to the people, as well as directly connecting
them with services on offer, regardless of where they are from.
In order to ensure sustainable development, digitalization must be carried
out evenly across all countries, avoiding delays that could slow economic
growth and widen the gap between regions. This research has shown that,
despite all the efforts made by the EU regarding the efficiency of
digitalization, progress has not been entirely even across the regions of the
member states. Moreover, we find evidence that the efforts made in recent
years have been oriented towards the introduction of innovation, overlooking
the need to improve the use of available services, which would improve the
efficiency of the available digital resources. The study has centered on the
situation of four European countries, France, Spain, Portugal and Italy. While
they all have different digital technologies, it is shown that the French regions
are the ones that are best managing their resources.
This analysis should be extended to all EU member states in order to
assess the situation and target economic resources at those areas in greatest
need. Digitalization fosters growth; hence, there is a need to facilitate its
implementation to achieve a digital Europe conducive to unity and connection
with the rest of the world.

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Chapter 2

Digitalization in EU Companies:
Challenges and Evolution

Juan J. Lull1, PhD, Roberto Cervelló-Royo2,*, PhD

and Carlos Devece1, PhD
1Department of Business Organization,
Universitat Politècnica de València, Valencia, Spain
2Department of Economic and Social Sciences,

Universitat Politècnica de València, Valencia, Spain

Abstract

Companies in the European Union are increasingly introducing advanced

technological tools to achieve digital transformation. This situation
requires introducing and implementing the Internet of Things and Big
Data, among others.
Digital transformation in companies is key to success in Industry 4.0,
and companies that do not introduce advanced digitalization techniques
are doomed to failure in the future. This study assesses how far this
transformation is progressing in the EU compared to other major players
such as the UK and the US. The data was obtained from an annual survey
produced by the European Investment Bank and conducted on 13500
companies year on year in the EU, the UK and the US. The research
focused on the level of digitalization in four main production sectors:
Manufacturing, Infrastructure, Construction, and Services, and included
data from 2017 to 2020.
The data showed that many EU companies are less digital than those
in the US and on par with those in the UK. Specifically, the U.S. has
advanced digital technologies implemented in 73% of companies,

*
Corresponding Author’s Email: [email protected].

In: Digitalization in Business

Editors: José Manuel Guaita Martínez and Rosa Puertas Medina
ISBN: 979-8-88697-275-7
© 2022 Nova Science Publishers, Inc.
30 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

compared to 63% in Europe and 59% in the UK. The biggest difference
in digital transformation was especially evident in small businesses, with
a 13% difference (EU: 47.7%, US: 60.8%). This gap was also high for
micro enterprises (EU: 39.7%, US: 48.8%) and SMEs (EU: 51.6%, US:
59.1%). In contrast, the difference was non-existent for medium-sized
companies and 4.1% (EU: 75.4%, USA: 79.7%) for large companies.
Looking at sectors, the biggest difference was found in the Construction
sector, where EU companies were 37% behind in digital transformation
compared to the US (EU: 40%, US: 77%). The most evenly matched
sector was Manufacturing, with both at around 68% digitalization and a
difference of 2%.
Europe is at a crossroads. The importance of digitalization today
makes it essential for EU companies to adapt to the latest techniques, e.g.,
introducing drones in the construction sector, IoT and Big Data in
manufacturing companies. The lack of digital transformation is a major
challenge in Europe, where it lags behind the US. Critical measures
should be introduced to accelerate the deployment of advanced
technologies in the EU.

Keywords: European Union, digitalization, Industry 4.0, global digitalization

Introduction

Digitalization has been identified as one of the major trends changing business
and society (Parviainen et al., 2017). Digitalization causes changes in
companies due to the adoption of digital technologies. In fact, digitalization
shapes the way companies are managed in current times. Although different
frameworks try to define what exactly digitalization means, it is generally
considered as a change in individuals, companies and society in the short and
long term related to Information Technologies. Here we will refer to
digitalization as digital transformation, including three levels: From the basic
analog-to-digital conversion or digitization to the creation of new business
models or digital transformation, including the intermediate step,
digitalization, or the modification of business processes (Verhoef et al., 2021).
On the one hand, digitization is “the process of changing data into a digital
form that can be easily read and processed by a computer” (Oxford English
Dictionary, n.d.), i.e., transforming analog paper and pencil information into
digital data. On the other hand, both digitalization and digital transformation
refer to changes in society and businesses at all levels due to digital
technologies (Agarwal, 2010; Majchrzak, 2016).
 Digitalization in EU Companies: Challenges and Evolution 31

Let’s introduce examples for the three levels: Digitization, Digitalization,

and Digital Transformation. An example of digitization could be moving from
manually counting the number of parts in a warehouse and recording it on
paper, to having a digital record of the parts, thus allowing the entire company
to see the status of the warehouse. The next level, digitalization, could be
exemplified by the introduction of automatic triggers that alert managers that
a product needs to be replenished before it runs out. It could also be the
automated ordering of the product without any human intervention. Finally,
an example of Digital Transformation is Industry 4.0 or smart manufacturing
which, through the introduction of the Internet of Things (IoT), cloud
computing, Artificial Intelligence (AI) and Big Data, among others, moves the
monitoring of the manufacturing process to AI-based decisions that are
directly implemented.
Following Parvianen et al., (2017), we could differentiate four different
levels of digital transformation, depending on who it affects:

• Social level: Modify how society is structured, with collaborative

ecosystems between academia, the private sector, civil society and
public organizations (Pappas et al., 2018).
• Enterprise level: Introduction of changes in the Value Chain through
IT.
• Organizational level: Offering new services and traditional services
in a novel way.
• Process level: Introduce digital tools and reduce manual steps,
improving processes.

Although the world is global, companies in the European Union (EU),

China, United States of America (USA), etc. are very different in terms of size,
culture, source materials, political structures, etc. (Ghemawat, 2001).
Moreover, the levels of digitalization are different among these actors. In this
paper, we aim to show the state of digital transformation in the EU as a whole
and in individual countries.
The rest of the article is structured as follows. Section 2 reviews the
literature on Industry 4.0, Big Data and the Internet of Things. Section 3
explains the data and methods used. Section 4 presents the research results
obtained by applying the analysis. Section 5 summarizes the conclusions of
the study and its limitations.
32 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

Theoretical Framework

Digitization can be defined as the conversion of analog information in any

form, such as sound, text, images, and physical attributes, to a digital format
so that the information can be processed, transmitted, and stored through
networks, electronic devices, and digital circuits (Ng & Wakenshaw, 2017).
Digitization blurs the lines between management and technology, facilitating
new business models built on the concepts, methods and tools of the digital
environment. Moreover, digitalization is the use of digital technologies to
change business models, creating new benefits and opportunities to generate
value, moving from a non-digital to a digital business (Gartner Glossary,
n.d.b) Sestino et al., (2020) investigate the role of Big Data and the Internet of
Things (IoT) in terms of managing the digital transformation of companies.
Thus, Industry 4.0 and its main components, Big Data and the Internet of
Things, play a crucial role in creating disruption at a Schumpeterian level
leading to the process of turning previously immovable and static information
into a dynamic and transportable resource.

Industry 4.0

The Fourth Industrial Revolution or Industry 4.0 is a paradigm shift towards a

more advanced digital transformation in manufacturing. This term was coined
in Germany and adopted by the German government, specifically by two
ministries: The Ministry of Education and Research and the Ministry of
Economics and Energy (Platform-i40, n.d.). The earlier stages of the industrial
revolution began with the first industrial revolution, at the end of the 18th
century, with machines such as the mechanical loom, which enabled the mass
production of goods. The second industrial revolution began in the 20th
century and consisted of the mass production of goods with electric power
based on the division of labor. Subsequently, the third industrial revolution or
digital revolution (1970s) introduced electronics and IT to achieve greater
automation of manufacturing processes. With the advent of the third
revolution, manual labor was reduced, but also intellectual labor was adopted
by machines. Finally, currently, the fourth industrial revolution is taking place,
which consists of the intertwining of the physical world with the virtual world
(Colombo et al., 2014), with IoT as the most prominent exponent and Big
Data.
 Digitalization in EU Companies: Challenges and Evolution 33

As discussed above, digitalization is increasing rapidly and companies

must find new ways to innovate to take advantage of the business. Thus, new
business and optimization opportunities can capitalize on this advantage
through digital transformation, the use of new technologies such as cloud,
mobile, big data and social networks along with increased intelligence and
automation (Salminen et al., 2017). The capacity and availability of data has
grown exponentially, coining the term Big Data (Sagiroglu 2013).
Supermarkets were systematically studying user behavior as early as the
1990s, and there was considered to be a wealth of information, which was
expanding with the Internet (although Big Data as such did not exist and the
way to manage data was the Data Warehouse) (de Fatima Rodrigues et al.,
1998). Data warehousing allowed business leaders to view processes in easy-
to-use dashboards and capture information about their customers. However,
data warehousing was slow and extremely manual. Big data refers to both the
explosion of data and the tools to analyze the vast amounts of data. The main
characteristics of Big Data are: Velocity, Volume and Variety. A huge amount
of data (volume), which is generated at high speed (velocity) and is
heterogeneous (variety), needs new tools for visualization, aggregation,
normalization and storage that allow companies to take advantage of
humongous amounts of data collected from their own companies, competitors,
customers, etc.
According to Sestino et al., (2020), Big data together with the Internet of
Things (IoT) have been a point of disruption providing added value not only
for companies but also for individuals. Indeed, all these everyday objects are
equipped with wi-fi networks, sensors and computing enhancements.
Therefore, there are billions of physical devices possessing computing
facilities that allow to collect a lot of information in real time (Guo et al.,
2013). Thus, the combination of Big data and IoT can help not only companies
but also public institutions to increase their competitiveness by transforming
their services and products into digital opportunities. These voluminous
amounts of data make it possible to offer advanced healthcare systems,
industrial automation, smart city devices, among others. For example, this
combination has given rise to Intelligent Marketing in Smart Cities (Chen and
Ji, 2016) through crowdsourced data.
Gartner defines IoT as the “network of physical objects that contain
embedded technology to communicate and sense or interact with their internal
states or the external environment” (Gartner, n.d.). Even though the term
Internet of Things is becoming more widely used, there is no consensus or
common understanding of what IoT actually encompasses (Wortman and
34 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

Flüchter, 2015). As Weber and Weber (2015) state, the IoT is gradually
developing and comprises a global Internet-based information architecture
that facilitates the exchange of goods and services. The possibilities of IoT are
broad, including success stories in factories (e.g., waste efficiency as in
Kabugo et al., 2020; battery module assembly factories as in Kahveci et al.,
2022), autonomous vehicles (e.g., Khayyam et al., 2020), and a wide range of
applications in different areas such as smart grids, robotics, smart cities, smart
homes, health monitoring, traffic, logistics, retail, etc. (Colakovic and
Hadzialic, 2018), etc. Asghari et al., (2019) propose a taxonomy of IoT
applications divided into 6 main groups: healthcare, environment, smart city,
commercial, industrial and general aspects. At the same time, commercial
applications can be subdivided into shopping and retail systems, while
industrial applications are divided into smart grid and scheduling systems.
Specifically, in the IoT and smart grid domain, in Reka and Dragicevic
(2018), three segments, with use cases, are detected: First, the Energy Delivery
and Peak Demand segment, with the following typical cases: Smart Meter
Reading, Control System for Advanced Transmission and Distribution, and
Online Monitoring of Power Generators. Secondly, the residential,
commercial and industrial segment, with cases such as Home Energy
Management, Electric Vehicle Charging and Demand Response Modeling.
Finally, a third segment is detected, Utilities / Consumers, with Smart meter/
automated meter reading (electric water, gas, heat), Asset management and .
Robotics has evolved to accommodate to Industry 4.0. Key features
include the Internet of Things, so that robots can be connected like any other
part of the manufacturing process, and Artificial Intelligence, which allows
robots to collaborate on tasks. This takes robots to a new level, where they not
only handle tasks designed for isolated automated work, but also autonomous
tasks.
The application of robotics in Industry 4.0 has enormous benefits. They
offer precision, repeatability, reliability, productivity and intelligence. Thus,
they can complete many automated tasks, including some that would not be
possible for humans (e.g., performing work in extreme conditions of
temperature, weather, etc.).
A seminal research (Grieco et al., 2014) focused on fields of interaction
between IoT and robotics that have been validated over time: Healthcare
applications, e.g., remote surgery (Shabana, Velmathi, 2018) or IoT robotics
support to rehabilitation (Meng et al., 2018); industrial plants, including
nuclear power plant management (Iqbal et al., 2012), renewable energy
management - assisting both the production and service side of the value
 Digitalization in EU Companies: Challenges and Evolution 35

chain, with inspection and maintenance of utilities (Iqbal, 2019); military

applications (Sapaty, 2015); and rescue management systems; in the mining
industry, several applications help reduce costs and risks to human lives
(Molaei et al., 2020, Wanasinghe et al., 2020).
In general, the benefits of IoT are manifold, and depend on the
characteristics of the activity in which the IoT is applied. For the use of IoT in
some business activities, the technology must be enhanced to achieve easy
deployment, self-maintenance and security in several crucial aspects such as
authentication, data privacy, robustness against attacks, etc. (Fernández-
Caramés and Fraga-Lamas, 2018). The advantages of IoT in less demanding
technological infrastructure contexts are easily achievable, and the application
of IoT in these environments is spreading rapidly.
In smart cities, for example, IoT encompasses aspects such as traffic
reduction, improved security, infrastructure planning, smart street lighting,
telepresence, smart parking systems, geographic information, etc. The
implementation of IoT in cities requires the integration of a wide variety of
technologies. For example, a simple project to collect environmental data such
as CO2 level, humidity, temperature, vibration and noise (Talari et al., 2017)
through sensors requires the interconnection of multiple devices and the
integration of different technologies (Zanella et al., 2014).
In the case of smart home applications, IoT can help in energy
conservation, healthcare (especially for the elderly and people with
disabilities), comfort, safety, and security (Alaan et al., 2017).
In more demanding activities, such as remote control IoT, devices must
connect efficiently with very low latency (minimum delay in messages
between sender and receiver) and this is one of the main objectives of 5G
connections. Moreover, since IoT will have an impact in different areas, a
regulatory framework will help to ensure the security of the structure as well
as the privacy of its potential users (Weber & Weber, 2015). But the
implementation of IoT is a combination of technologies and processes, and
more complex applications, such as collision avoidance systems, require a full
development of IoT enabling technologies. Open system interconnection
layers need to be standardized and the services that provide them need to be
developed. According to Colakovic and Hadžialic (2018), there are still
challenges to overcome in full IoT deployment, such as standardization,
architecture, interoperability, reliability, data processing and storage, self-
configuration, identification, power consumption, and security.
But the different applications and benefits of IoT will be explored by
enterprises when the technology infrastructure supporting it reaches a
36 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

complete state. In this sense, the integration of other technologies with IoT,
such as Blockchain Technology and Artificial Intelligence, may provide some
of the characteristics of the next radical innovations in business models and
personal tools. Krotov (2017) describes IoT as an emerging phenomenon that
offers new business opportunities to empower entrepreneurs and existing
companies. One of the clearest applications of IoT in business activities is
supply chain management. IoT can optimize supply networks by changing the
configuration of the physical supply chain system. IoT can control costs,
vehicle routes and even the quality of perishable goods.
At the same time, the wide deployment of IoT generates massive data that
can be exploited by data mining. Data mining functionalities include
classification, clustering, association analysis, time series analysis, and outlier
analysis (Chen et al., 2015).
Extracting hidden information from data collected through IoT has high
business value (Chen et al., 2015). The extensive data generated by IoT can
also help to increase the responsiveness and transparency of authorities in
public management and can favour the control and participation of citizens in
the proposed resolution of public problems.
But some applications of IoT are controversial. For example, security has
been greatly enhanced by surveillance devices, such as cameras connected to
smart processing. With these systems, the privacy of citizens depends on the
enforcement of data protection laws and the proper functioning of institutions.
This security can be extended to any type of belonging through IoT that allows
the location and use of any product. Maintenance of complex products such as
vehicles and household appliances can be tracked. Data on how products are
used, when and how they malfunction, and how they are handled without the
vendor’s supervision are important for product improvement and customer
satisfaction. In addition, the product can be protected against thieves and
security can be improved. However, the buyer can lose full control of the
product. The seller can oblige, always under previous contractual agreements,
strict maintenance at the seller’s premises after the sale and block the operation
of the product if tampering is detected. Product usage data can be a source of
conflict between buyer and seller if there is no clear agreement on privacy and
data protection.
 Digitalization in EU Companies: Challenges and Evolution 37

Materials

This paper will present the current state of digital transformation in Europe
compared to that in the United States. The information introduced here is
available online as an open-access repository published by the European
Investment Bank (EIB Investment Survey, n.d.). It comprises aggregated
annual survey data including qualitative and quantitative information. The EIB
Investment Survey is conducted every year and its main objective is to provide
the EIB with robust information on the investment situation in the 27 EU
member countries, the UK and the US (Ipsos MORI, 2020). It has been
conducted every year since 2016, with some general questions repeated
annually and specific questions that are different each year. The information
from U.S. companies allows us to compare with that of the EU.
Although the data focuses mainly on the investment activities, financing
needs and financial difficulties of companies, it also provides information on
other areas, such as digital transformation in these companies.
Data include surveys of 13,500 companies. Data are represented as the
aggregation of companies in each region.
The specific fields considered are:

• EU Member countries, EU as a whole, United Kingdom, United

States
• Company size
• Answer to a specific question about digitalization.
• Sector of the company

Companies were selected from NACE categories C to J with at least five

employees. Respondents were senior managers, and could be the owner, the
CEO, the CFO or a Finance Manager.
The survey consisted of more than 40 questions. The question of interest
here was:

“Can you tell me for each of the following digital technologies whether
you have heard of them, whether you have not heard of them, whether you
have implemented them in parts of your business, or whether your entire
business is organized around them?” (European Investment Bank, 2021).

The following sectors were studied: Manufacturing, Construction,

Services, and Infrastructure.
38 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

The possible answers on advanced digital technologies depended on the

sector. IoT deployment was a possible answer for all sectors. 3D printing was
a possibility for all sectors except services. Big data was a possible answer for
all sectors except construction. Specifically, in manufacturing, it was asked
about possible automation through advanced robotics. In construction, the
implementation of drones was asked about, as well as virtual or augmented
reality. Companies in the service sector were asked about virtual reality and
platforms (systems that connect business-to-business or business-to-
consumer). Finally, infrastructure also included platforms.

Table 1. Advanced digital technologies questioned in each sector

Sector Technologies
Manufacturing 3D printing (additive printing)
Big data / AI
Robotics
IoT
Construction 3D Printing
Drones
IoT
Big data / AI
Services VR / AR
Platforms
IoT
Big data / AI
Infrastructure 3D Printing
Platforms
IoT
Big data / AI
Source: Own elaboration.

With these data, companies could be segmented as “digital, single

technology” if they implemented at least one technology. If they implemented
more than one, they were classified as “digital, multiple technologies.” They
could also be “non-digital” (no advanced digital implementation).

Current Situation in the EU

The lack of comprehensive statistics prevents an analysis of the data by

company, which would have shed light on the differences between individual
companies.
 Digitalization in EU Companies: Challenges and Evolution 39

The 2020 survey wave (which includes 2019 data) showed that many EU
companies are less digital than those in the U.S. and on par with the UK.
Specifically, the U.S. has advanced digital technologies implemented in 73%
of companies, compared to 63% in Europe and 59% in the UK.
Comparing companies in the EU with those in the US, the biggest
difference in digital transformation was particularly evident in small
companies, with a 13% difference (EU: 47.7%, US: 60.8%). This gap was also
high for micro enterprises, with a 9.1% difference (EU: 39.7%, US: 48.8%)
and for SMEs, with a 7.5% difference (EU: 51.6%, US: 59.1%). On the other
hand, the difference was non-existent in medium-sized companies, and in
large companies it was 4.1% (EU: 75.4%, USA: 79.7%). These metrics and
differences can be seen in Table 2.

Table 2. Digital transformation in the EU, USA, UK separated

per company size

Company digitalization: Company Size

EU USA UK
Micro 40% 49% 42%
Small 48% 61% 49%
SME 52% 59% 54%
Medium 61% 60% 64%
Large 75% 80% 63%
All 63% 74% 59%
Source: Own elaboration.

Table 3. Digital transformation in the EU, USA, UK, per sector

Company digitalization: Sector

EU USA UK
Manufacturing 67% 70% 60%
Construction 40% 77% 69%
Infrastructure 55% 79% 67%
Services 60% 72% 59%
All 63% 74% 59%

Looking at sectors, the biggest difference was found in the Construction

sector, where EU companies were 37% behind in digital transformation
compared to the U.S. (EU: 40%, U.S.: 77%). The sector that was most on par
40 Juan J. Lull, Roberto Cervelló-Royo and Carlos Devece

was Manufacturing, with both at around 68% digitalization and a difference

of 2%. The Infrastructure sector showed a difference of 11% (EU: 67.7%, US:
78.7%). In this sector, the UK accounted for an even smaller digital
transformation of 23.5% compared to the US (UK: 55.2%). Finally, services
show a 12% difference between the EU and the US (EU: 60%, US: 72%). The
level of digitalization by sector size is available in Table 3.

Table 4. Digital transformation in the EU member states, per sector

Company digitalization: Countries and Sectors

ISO Code Manufacturing Construction Infrastructure Services
EU Country
Austria AT 73% 34% 73% 60%
Belgium BE 75% 44% 76% 62%
Bulgaria BG 56% 31% 52% 63%
Croatia HR 66% 56% 59% 65%
Cyprus CY 35% 54% 0% 55%
Czechia CZ 79% 55% 80% 70%
Denmark DK 82% 49% 78% 74%
Estonia EE 79% 50% 59% 59%
Finland FI 84% 58% 75% 75%
France FR 64% 27% 58% 40%
Germany DE 66% 35% 60% 63%
Greece EL 48% 45% 63% 54%
Hungary HU 69% 38% 60% 66%
Ireland IE 58% 51% 39% 41%
Italy IT 62% 37% 82% 66%
Latvia LV 61% 61% 66% 58%
Lithuania LT 52% 27% 68% 69%
Luxembourg LU 58% 50% 77% 63%
Malta MT 46% 0% 69% 54%
Poland PL 64% 27% 39% 48%
Portugal PT 67% 44% 84% 61%
Romania RO 48% 24% 71% 60%
Slovakia SK 69% 62% 71% 68%
Spain ES 76% 58% 82% 68%
Sweden SE 82% 50% 73% 64%
Switzerland SI 80% 34% 60% 46%
The Netherlands NL 73% 71% 85% 73%
EU countries EU 67% 40% 68% 60%
Country
UK UK 60% 69% 55% 59%
USA USA 70% 77% 79% 72%
Other documents randomly have
different content
 CERCIS CANADENSIS Linnæus. Redbud. (× 1/2.)

Plate 106

GLEDITSIA TRIACANTHOS Linnæus. Honey Locust. (× 1/2.)

Distribution.—Pennsylvania, southern Michigan to Iowa, and

south to the Gulf States and west to Texas. Found infrequently
throughout Indiana along streams, except that it is absent about
Lake Michigan and that in the southwestern counties it becomes a
frequent tree in the Wabash bottoms. In its native habitat it is rarely
found except near a stream, pond, lake, etc. However, in the
southeastern counties it has spread all over many of the hillsides
which were once cleared and have been abandoned for agricultural
purposes and left to natural forest regeneration. It was interesting to
learn how this tree was able to propagate itself on the steep bare
slopes. It was found that the seeds were scattered by cattle that
greedily eat the fruit. It is a medium sized tree, except in the
Wabash bottoms of the southwestern part of the State where it
grows to be one of the largest trees of the forest, and is more
luxuriant than in any other part of its range.
Remarks.—In making a study of the fruit of this species, it was
found that the sides of all the pods of all the specimens at hand
except one are glabrous, even those of young fruit. The margins of
the pods are pubescent. However, a specimen collected on August
27th in Vermillion County has the entire pod covered with long hairs.
In consulting the literature on the subject it is found that some
authors describe the fruit as glabrous while others describe it as
hairy. It would be interesting to study the significance of this
character to learn if each form has a geographic range.
The wood is used principally for interior finish, furniture, posts
and crossties. The tree has a grace that recommends it for
ornamental planting despite its thorns. However, a thornless variety
is now offered by nurserymen. It adapts itself to all kinds of soils,
although it prefers a moist rich soil; grows rapidly and is
comparatively free from insect damage.

Plate 107
 GLEDITSIA AQUATICA Marshall. Water Honey Locust. (× 1/2.)

2. Gleditsia aquática Marshall. Water Honey Locust. Plate 107. A

medium sized tree with rather smooth bark, which becomes rough
and flaky on large trees; twigs greenish, turning to a light brown by
the end of the year; branchlets a greenish-gray brown; spines all
usually more or less flattened, those of the branchlets and branches,
rather few and usually simple, 4-10 cm. long, those of the trunk
branched, spines do not develop on the year's growth; leaves from
old wood pinnate, from the year's growth bipinnate; rachis grooved
and pubescent or puberulent above and smooth below; leaflets
generally 7-11 pairs, variable in shape and size, generally lanceolate
and 1.5-2.5 cm. long, on petiolules about 1 mm. long, glabrous;
flowers similar to the preceding species; fruit a glabrous, shining,
oblique pod about 4-5 cm. long, containing 1 seed; seeds orbicular,
flat, chestnut brown, about 1 cm. in diameter.
Distribution.—Atlantic Coast from North Carolina south to
Florida, and the Mississippi Valley from southwestern Indiana
southward to Texas. In Indiana this species is rare and limited to the
banks of river sloughs, locally called ponds and to one cypress
swamp. It is known to have occurred on the banks of Wabash and
Dan's ponds and Little Cypress swamp in the southwest corner of
Knox County, and in Gibson County on the bank of a slough near
Skelton and about Burnett's pond. The reference to Posey County is
without a verifying specimen, although it may be found in the
county. The writer has visited about every place in the county where
the species might occur, and has never found it. Gorby's[57]
reference for Miami County is without doubt an error. In our area it is
a low crooked tree and grows with its base submerged more or less
during the year. The idea of the proportions of this tree can be
obtained from the measurements taken from the largest tree now
known in Indiana, which is located on the shore of Dan's pond in
Knox County. It measures 158 cm. (66 inches) in circumference at 1
m. above the ground, and is estimated to be 10 m. (30 feet) high.
This species is too rare to be of economic importance.

Gleditsia aquatica × triacanthos. Dr. Schneck[58] found two

honey locust trees which he described as hybrids of the two species.
The one was located on the bank of Dan's pond in Knox County, and
the other in Gibson County. The original description is as follows: "In
both instances the pods are the distinguishing feature. These are
very much alike in both trees, being about 5 inches long, 11/2 inches
wide, smooth, shining, of a light brown color and entirely destitute of
pulp. Otherwise the tree cannot be distinguished from the trees
among which they stand. They are both about 50 feet high, with
short stems and spreading branches, and stand about 5 miles apart."
The writer has five fruiting specimens from these two trees, taken by
Dr. Schneck. Two of the sheets have the round and branched spines
of G. triacanthos.

3. GYMNÓCLADUS. The Coffee Tree.

Gymnocladus dioíca (Linnæus) Koch. Coffeenut Tree. Plate 108.
Medium sized trees; bark of trunks fissured, the ridges often curling
up along the sides, very hard; twigs at first hairy, becoming glabrous
and mottled gray-brown by the end of the season, robust, usually
about 1 cm. in diameter; leaves alternate, twice pinnate, 3-9 dm.
long, leaflets usually 6-10 pairs, ovate, generally from 3-4 cm. long,
generally oblique and rounded, wedge-shape or truncate at the base,
acute or very sharp-pointed at the apex, petiolules about 1 mm.
long, pubescent on both sides at first, becoming glabrous or nearly
so at maturity; flowers of two kinds, the male and female on
separate trees, appearing in May or June; fruit a pod generally about
1-2 dm. long, thick, curved; seeds generally 4-7, large, flattened
about 2 cm. in diameter; wood heavy, not hard, coarse-grained and
takes a high polish.
Distribution.—New York, southwestern Ontario to southern
Minnesota south to Tennessee and Arkansas. This species has been
reported or is known to exist in 33 counties in various parts of the
State. It no doubt was native to every county of the State, except it
be those bordering Lake Michigan from which we have no reports. It
is a rare tree in all parts. Only exceptionally is it found even
frequently. A few trees may be found in one place, and it will not be
found again for many miles. No doubt there are many areas with a
radius of 5 to 10 miles where this tree never occurred. It is usually
found in alluvial soil along streams, or nearby terraces.
Remarks.—This species generally is not very tall, and is usually
found in open places in the forest or cut-over lands. However, one
specimen was seen in Posey County that was as tall as a specimen of
pecan of equal size that grew nearby. This species was so rare in this
vicinity that I was asked to drive three miles to identify this tree
which no one could name.
Coffeenut, which is sometimes called Kentucky coffeenut, has
always been so rare as to be of little economic importance. It has no
qualities to recommend it for ornamental planting.

Plate 108
GYMNOCLADUS DIOICA (Linnæus) Koch. Coffeenut Tree. (× 9/20).
 FABÀCEAE. The Pea Family.
Trees, shrubs, vines or herbs with alternate leaves, mostly
compound; flowers with five petals which are pea-like
(papilionaceous); stamens generally 10; fruit a legume.
 ROBÍNIA. The Locusts.
Robinia Pseùdo-Acàcia Linnæus. Locust. Black Locust. Plate
109. Medium sized trees with deeply furrowed bark; twigs at first
green and hairy, becoming at the end of the season glabrous and a
light brown, the stipules developing in about a year into a pair of
woody spines about 2 cm. long; leaves pinnate, 1.5-3 dm. long;
leaflets 7-17 on short stalks, ovate to oblong, 2-6 cm. long, rounded
at base, rounded or pointed and with a small indenture at apex,
margin entire, pubescent on both sides at first, becoming at maturity
glabrous above and remaining more or less pubescent below,
especially on the midrib; flowers in loose racemes, white, expanding
in May or June; fruit a flat and slightly curved pod about 5-10 cm.
long, glabrous; seeds usually 4-8 in each pod, about 4 mm. long and
2.5 mm. wide; wood heavy, very hard, close-grained, takes a good
polish, very durable in contact with the soil.
Distribution.—Appalachian Mountains from Pennsylvania south
to northern Georgia, and in Arkansas. In Indiana it is found as an
escape in all parts and was doubtless native along the Ohio River, at
least in the southeastern part of the State. Thomas[59] says: "We
had gazed at the majestic beech of this country (near Rising Sun)
three feet in diameter; we had seen the honey locust, the black
walnut, a buckeye of equal magnitude; and then we saw with
surprise, the black locust almost a rival in stature." Drake[60] says:
"The flowering locust is abundant in Kentucky. Along the Ohio River
it is rarely found more than 30 miles north of the river."
Remarks.—This tree is generally known as the locust tree, but is
sometimes called the yellow locust.
 Locust wood is somewhat lighter than white oak, but it is 34
percent stiffer and 45 per cent stronger. These remarkable qualities
added to its durability in contact with the ground make it one of the
most desirable trees for forest planting. The wood has been used
principally for posts, ties, tree nails, etc. The locust when grown
close together usually grows to 8-12 inches in diameter. There are,
however, specimens that have grown in the open that are almost
three feet in diameter. The pioneers used it extensively for
ornamental planting, and it has escaped from such planting in all
parts of the State. It propagates easily by root shoots which is the
principal mode of spreading, except where the seed fall on exposed
soil.

Plate 109
 ROBINIA PSEUDO-ACACIA Linnæus. Black Locust. (× 1/2.)

The locust has of recent years been extensively planted for post
timber. It is very easily propagated from seedlings and grows rapidly.
It is adapted to all kinds of soil, except a wet one. It prefers a well
drained soil and seems to grow as fast in a loose clay soil as in a
black loam. When used for forest planting the spacing should be
from 5×5 feet to 8×8 feet. The spacing should be governed by the
quality of the soil, and the amount of pruning that can be done. The
locust has the habit of having the terminal to end in a fork and
having one or more very large side branches. The best management
requires that the very large side branches be removed as soon as
they are noted, and one part of the terminal forks be cut off.
The locust until recently gave great promise of being an
important tree for planting sterile, washed and eroded slopes, on
which it usually thrives and in many cases grows thriftily. However,
reports from all parts of the State show that locust groves wherever
planted are being killed by the locust body borer. The locust has also
been attacked by the twig borer, bag worm and the leaf miner. At
present there are no known economic means of controlling these
destructive pests, and until they can be controlled, the planting of
locust for commercial purposes will not prove profitable.
 SIMARUBÀCEAE. The Quassia Family.

AILÁNTHUS. Tree of Heaven.

Ailanthus altíssima (Miller) Swingle. Tree of Heaven. Stink Tree.
(Ailanthus glandulosa Desfontaines). Plate 110. Medium sized trees
with dark gray bark, thin, rough or fissured on old trees; branchlets
very robust; twigs smooth; leaves compound and very large,
especially on coppice shoots, usually about 4-6 dm. long, odd-
pinnate, arranged spirally on the branchlets; leaflets 13-41, ovate-
oblong, acuminate, oblique at base, entire or with a few blunt teeth
toward the base, smooth or hairy when they unfold, becoming
smooth at maturity, dark green above, lighter beneath; flowers
appear in June in large terminal panicles, the staminate and pistillate
on different trees; fruit maturing in autumn, consists of many light
brown, twisted and broadly-winged samaras which are about 1 cm.
wide and 4-5 cm. long.
Distribution.—A native of China. Introduced and spreading in
cities, and into fields and woods in the southern part of the State.
The most notable occurrence is in Jefferson County on the wooded
bluffs of the Ohio River between Madison and Hanover.
Remarks.—Where the sugar and black maple can not be used
for shade tree planting this tree should receive attention. It adapts
itself to all kinds of soils, and to all kinds of growing conditions such
as smoke, etc. The crown is of an oval or rounded type. It stands
pruning and injury to trunk or branches quite well. It is practically
free from all diseases and insect injury. The leaves appear late but
they do not fall until the first killing frost when they are killed, and
frequently practically all of the leaves will fall in one day. The
staminate flowers exhale a fetid odor for a few days which is about
the only objectionable feature in this tree. In order to obviate this
objection, nurserymen are now offering for sale pistillate trees which
have been grafted on common stock.

Plate 110

AILANTHUS ALTISSIMA (Miller) Swingle. Ailanthus or Tree of Heaven. (× 1/2.)

 ACERÀCEAE. The Maple Family.

ÀCER. The Maples.

Trees with terete branches; scaly buds; long petioled, opposite
leaves; fruit consists of two long-winged samaras which are joined at
their base, separating at maturity. The sap of some of the species,
when concentrated, yields the maple sugar and sirup of commerce.
Leaves trifoliate or pinnate 1 A. Negundo.
Leaves simple.
Winter buds blunt; flowers
appear from lateral buds
before the leaves; fruit
maturing in the spring or
early summer.
Leaves entirely glabrous 2 A. saccharinum.
beneath at maturity, 5-
lobed; the two sinuses
between the three
largest lobes generally
somewhat closed,
formed as it were by
the arcs of two circles
which meet to form the
sinus, and which if
they were extended
outward would cross
each other within a few
dm. of the sinus; fruit
 more or less pubescent
at maturity
Leaves are never all entirely
glabrous at maturity, 3-
5 lobed; the two
largest sinuses are
generally angular with
straight sides which if
extended outward
would never cross;
fruit smooth at
maturity.
Twigs smooth at
maturity; leaves at
maturity smooth
beneath except a
few hairs in the
axils of the veins,
or more rarely the
entire lower
surface covered
more or less with
a short
pubescence;
mature fruit
generally 2-3.5
cm. long 3 A. rubrum.
Twigs more or less A. rubrum
pubescent at var. Drummondii.
maturity; leaves
beneath covered
with a dense
tomentum which
remains until
maturity or
 sometimes
becoming scanty;
fruit about 4-5 cm.
long
Winter buds acute, sometimes
somewhat blunt; flowers
appear from terminal buds
after the leaves; fruit
maturing in the autumn.
Leaves yellow green
beneath; base of the
petiole of the terminal
leaves enlarged at the
base, smooth or
somewhat pubescent
about the enlarged
base 4 A. nigrum.
Leaves not yellow green
beneath; base of the
petiole of the terminal
leaves not enlarged,
petioles smooth, or if
pubescent at the base
the pubescence will be
more or less evident
the entire length of the
petiole.
Petioles smooth; leaves
3-5 lobed, blade
as long or longer
than wide, not
densely pubescent
beneath at
maturity 5 A. saccharum.
 Petioles smooth; leaves
3-lobed, blades A. saccharum
wider than long var. Rugelii.
Petioles pubescent,
rarely smooth;
leaves 5-lobed,
rarely 3-lobed, the
under surface
densely pubescent A. saccharum
at maturity var. Schneckii.
1. Acer Negúndo Linnæus. Box Elder. Plate 111. A medium-
sized tree with a short trunk and round head; bark of young trees
smooth and gray, becoming thick on old trees, light to dark brown
and more or less furrowed or rarely somewhat flaky; twigs smooth
and greenish; leaves of average size are 1.5-3 dm. long, generally
with 3 leaflets on the flowering branches, sometimes 5 or rarely with
7, on sterile branches or on growing shoots 3-7, the petioles
generally 1/3-1/2 the length of the leaf and glabrous or nearly so at
maturity; leaflets all on stalks more or less pubescent, the lateral
stalks short, the terminal ones much longer, leaflets of varying size
and shape, the margins usually varying from lobed to serrate or
entire, pinnately veined, smooth above at maturity and remaining
more or less pubescent beneath, especially along the veins; flowers
appear just before the leaves the last of April or the first of May, the
staminate and pistillate on separate trees; fruit matures late in
summer, the body of the samara green and more or less pubescent.
Distribution.—New England to Florida, west to Minnesota and
south to eastern Texas. In Indiana, it is found throughout the State
in moist or wet places along creeks and rivers, and infrequently on
the highlands along roadsides and fences. Its original distribution in
the State can only be conjectured. Judging from its tolerance to
shade and its habitat, and from the earliest reports of its occurrence
in the State, this species was quite rare in the northern part of the
State, becoming infrequent to frequent in its habitat in the southern
part of the State. Even today it is rather local in its distribution. I
have never seen it on the low mucky border of a lake.
Remarks.—This species on account of its rapid growth was
formerly much used in our area as a shade tree. It is believed that
most of the trees now found along roadsides, fences, clearings and
on the drier banks of streams are from seed distributed by the wind
from planted trees. This species is now little used as a shade tree
and is never recommended because it sheds its leaves early, and is
subject to injury from disease and insects.

Plate 111
 ACER NEGUNDO Linnæus. Box Elder. (× 1/2.)

1a. Acer Negundo variety violàceum Kirchner. (Rulac Nuttallii

Nieuwland). This variety is distinguished by its glaucous twigs and by
the body of the fruit being glabrous at maturity. In most instances
when the bloom is rubbed from the twigs they show a purple tinge,
hence the varietal name.
Distribution.—I have this variety in Indiana from the following
counties: Brown, Cass, Elkhart, Franklin, Fulton, Hendricks, Henry,
Jennings, Lagrange, Martin, Posey, St. Joseph, Vermillion and Wayne.
 2. Acer saccharìnum Linnæus. Silver Maple. Soft Maple. White
Maple. Plate 112. Medium sized trees; bark of small trees smooth and
gray, becoming on old trees reddish-brown, and freely splitting into
thin scales; branchlets light to reddish-brown and generally turning
upward at their tips; leaves generally about 1 dm. long, generally
somewhat cordate at the base, sometimes truncate, deeply 3-lobed,
each of the lateral lobes with an additional lobe below, margins of all
of the lobes more or less irregular or even lobed, the two principal
sinuses generally show a tendency to close, leaves hairy beneath
when young, glabrous above and below at maturity and very
glaucous beneath; flowers appear in March or April in the axils of the
leaves of the previous year, the staminate and pistillate in separate
clusters on the same or different trees; fruit on pedicels 1.5-6 cm.
long, maturing in the spring or early summer, green, densely hairy
while young and remaining more or less hairy at maturity, 4-7 cm.
long, wings 1-2 cm. wide.
Distribution.—New Brunswick to Florida, west to South Dakota
and south to Texas. Locally frequent to very common in all parts of
Indiana. This species is always found in wet or moist places, and in
the lower Wabash bottoms in low overflow lands or in or about old
sloughs it often forms the principal stand. It is more frequently
associated with black willow, white elm, red birch, sycamore, etc.
Remarks.—The silver maple has been used extensively for shade
tree planting. The branches are very brittle, and ice storms
sometimes break off so many branches that the tree may be badly
injured. The shade trees of this species are in many parts of the
state being killed by scale insects, and for this reason it should not
be used. On account of its rapid growth it has also been much used
for windbreaks but this practice should be discouraged and better
species used.

Plate 112
 ACER SACCHARINUM Linnæus. Silver Maple. (× 1/2.)

3. Acer rùbrum Linnæus. Red Maple. Soft Maple. Swamp Maple.

Plate 113. Medium to large sized trees; bark of small trees smooth
and gray, becoming dark brown on old trees, somewhat furrowed
and scaly; branchlets smooth and reddish; twigs generally smooth
but sometimes hairy, becoming glabrous by autumn; leaves 5-12 cm.
long, 3-5 lobed, more or less cordate at the base, sometimes
truncate or rounded, sinuses acute, those of 3-lobed leaves generally
wider angled than those of 5-lobed ones, the lobes more or less
irregularly serrate or dentate, hairy while young, glabrous above and
more or less hairy beneath at maturity, glaucous beneath; flowering
period March or April; flowers red or reddish, in the axils of the
leaves of the previous year, the staminate and pistillate in separate
clusters on the same or different trees; fruit maturing late in spring,
on pedicels 3-8 cm. long, generally red, sometimes green, glabrous
at maturity, rarely somewhat pubescent, 1.5-3.5 cm. long.
Distribution.—Newfoundland to Florida, west to Minnesota and
south to Texas. It is found in all parts of Indiana. Its preferred
habitat is that of low ground about lakes, swamps, along streams
and in the "flats" in the southeast part of the State. Throughout its
range in Indiana where it is found in low ground, it is in places rich in
organic matter, except in the "flats" of the southern part of the State
where it grows in a hard clay soil with sweet gum, red birch, etc. In
contrast the silver maple is generally found growing in wet places
with little organic matter; especially is this true in the lower Wabash
bottoms. The red maple grows also on high ground. In the northern
part of the State it is only an occasional tree of gravelly ridges or on
high ground about lakes or along streams. In the southern part of
the State it is a local to a frequent tree in most parts of the "knob"
area where it is associated with white oak, black oak, black gum, etc.
It is also an occasional tree on the top of bluffs and cliffs.
Remarks.—The red maple is not abundant enough in Indiana to
be of any economic importance. It grows rapidly and should replace
the silver maple for shade tree planting since its branches are not
broken off as easily by ice storms and it is more resistant to insect
attack.
3a. Acer rubrum variety Drummóndii (Hooker and Arnott)
Torrey and Gray. This variety of the red maple is a form found in the
dense swamps of the lower Wabash Valley. It is distinguished from
the type by its twigs which generally remain more or less hairy until
maturity; by the under surface of the leaves remaining more or less
tomentose during the summer, and by its larger fruit. This variety is
known with certainty only from Little Cypress Swamp in Knox County
about 12 miles southwest of Decker. Here it is a frequent to a
common tree associated with cypress, swell-butt ash, button-bush,
sweet gum, etc. All of the trees of this locality have 5-lobed leaves.

Plate 113

ACER RUBRUM Linnæus. Red Maple. (× 1/2.)

A specimen collected in the "bottoms" about two miles east of

Huntingburg in Dubois County has 3-lobed leaves which are
tomentose beneath at fruiting time and has fruit intermediate in size
between the type and variety Drummondii which I doubtfully refer to
variety tridens Wood.
4. Acer nìgrum F. A. Michaux. Black Maple. Black Sugar. Plate
114. Medium to large sized trees with dark furrowed bark on old
trees; leaves a little wider than long, 6-15 cm. long, on petioles
usually 3-15 cm. long which are more or less swollen at the base and
by maturity develop a scale like appendage on each side of the
petiole at the base—especially on each of the terminal pair of leaves,
sometimes with foliar stipules which are 2-3 cm. long on stalks of
equal length, leaves with three main lobes, the two lower lobes
generally have a small lobe at their base, margins of lobes entire and
undulating, sinuses between main lobes generally rounded at the
base, wide and shallow, base with a narrow sinus, the lower lobes
often overlapping, rarely somewhat dentate, dark green above and a
paler yellow green below, hairy on both surfaces when young,
becoming at maturity glabrous above and remaining more or less
pubescent beneath; flowers appear in May when the leaves are
about half grown on long hairy pedicels, the staminate and pistillate
in separate clusters on the same or different trees; fruit matures in
autumn, the samaras about 3 cm. long.
Distribution.—Quebec to Georgia, west to South Dakota and
south to Louisiana. Found in all parts of Indiana and invariably
associated with sugar maple, and often with beech in addition.
Frequently almost pure stands of sugar maple may be found with the
black maple absent. Where found it is usually a frequent to common
tree, and when it occurs on a wooded slope it is more frequent near
the base and appears to be able to advance farther into moist
situations than its congener.
Remarks.—This tree cannot be distinguished from the sugar
maple by its form, but at short range can be separated from it by its
richer green foliage and by the drooping habit of the lower lobes of
the leaves. It is commonly separated from the sugar maple by the
darker color and by the narrower and shallower furrows of the bark,
but these characters will not always separate the two species. Hence,
when buying black maple trees from a nurseryman you may receive
the sugar maple. Those who distinguish the two species agree that
the black maple is the more desirable tree for shade tree planting.
The black and sugar maple are the two most desirable trees for
shade tree planting in Indiana. They are long lived, have a very
desirable form, beautiful foliage, a long leaf period, and are quite
free from disease and insect injury.

Plate 114
 ACER NIGRUM. F. A. Michaux. Black Maple. (× 1/2.)

5. Acer sáccharum Marshall. Sugar Maple. Sugar Tree. Hard

Maple. Rock Maple. Plate 115. Usually large, tall trees. The bark of
small trees is smooth or rough, becoming fissured on old trees, tight
or on very old trees sometimes the ridges loosen on one edge and
turn outward. The leaves are extremely variable on different trees,
and frequently show a wide variation on the same tree, as to form
and in the presence or absence of hairs on the petioles and on the
under surface of the leaves. In our area all of the forms which have
the majority of the leaves longer than wide or about as wide as long,
may be considered as falling within the type. The average sized
leaves are 6-12 cm. long, 3-5 lobed, more or less cordate at the
base, generally with a broad sinus, sometimes truncate or slightly
wedge-shape, sinuses generally wide-angled and rounded at the
base, sometimes acute, hairy beneath when young, becoming
smooth at maturity except for a few hairs along the veins or in the
main axils of the veins, or sometimes remaining more or less
pubescent over the whole under surface, more or less glaucous
beneath; flowers appear in April or May, on hairy pedicels 3-7 cm.
long, the staminate and pistillate in clusters on the same or different
trees; fruit ripening in autumn, samaras glabrous and usually 2-4 cm.
long.
Distribution.—Newfoundland to Georgia, west to Manitoba and
south to Texas. A frequent to a very common tree in all parts of
Indiana. It is confined to rich uplands, or along streams in well
drained alluvial soil. Throughout our area it is constantly associated
with the beech. It is absent in the "flats" of the southeastern part of
the State, and on the crest of the ridges of the "knob" area of
Indiana, but it is a frequent or common tree on the lower slopes of
the spurs of the "knobs."
Remarks.—The under surface of the leaves of the sugar maple
in the northern part of its range are green, while those of the
southern part of its range are quite glaucous beneath. To distinguish
these two intergrading forms the southern form has been called
Acer saccharum var. glaucum Sargent[61]. All of the trees seen in
Indiana have leaves more or less glaucous beneath. This character,
however, is not always evident in dried specimens. The writer prefers
not to apply the varietal name to the forms of our area. The sugar
maple always has been and will continue to be one of the most
important trees of the State. In its mass distribution in Indiana it
ranks not less than third. In the quality and uses of its wood it is
equalled or exceeded only by the oak, ash and hickory. When
compared with white oak it is a little lighter but thirty per cent
stronger and fifty-three per cent stiffer. The greatest amount of the
annual cut of maple is worked into flooring which is shipped to all
parts of the world. It is much used in the manufacture of furniture
and ranks third in use for veneer and hard wood distillation, and as a
fuel wood is excelled only by hickory. Since pioneer times, the sap of
this tree has been made into sirup and sugar and their manufacture
now forms a valuable industry. On an average it takes 3 to 4 gallons
of sap to make a pound of sugar, and an average sized tree will
annually yield about 3 to 4 pounds of sugar.

Plate 115
 ACER SACCHARUM Marshall. Sugar Maple. (× 1/2.)

The sugar maple on account of its slow growth has not been
used much in reforestation. It is very tolerant of shade, can adapt
itself to almost all kinds of soils, thrives either in a pure or mixed
stand, and is practically free from injury of insects and diseases. It
has, however, been extensively used as a shade tree. For this
purpose it is scarcely excelled by any other tree. When grown in the
open it almost invariably assumes a symmetrical oval form, and the
autumnal coloration of its foliage is rarely surpassed by any of our
trees. Where a large tree is desired for street or ornamental planting
the sugar maple can safely be recommended.
5a. Acer saccharum variety Rugélii (Pax) Rehder. This variety
of the sugar maple has leaves much wider than long, smaller and 3-
lobed. The lobes are long acuminate and usually entire, sometimes
the lower lobe has a small lobe near the base. This variety is
included in our flora on the authority of C. S. Sargent who has given
this name to specimens from Indiana in the writer's herbarium. The
specimens so named are from the southern part of the State. While
there is a wide range of difference in the shape of the leaves of the
typical 5-lobed Acer saccharum and its variety Rugelii, all
intermediate forms can be easily found. The leaves of a tree will vary
most on those trees whose average shaped leaves are farthest from
the typical form.
5b. Acer saccharum variety Schnéckii Rehder. This variety in
its extreme form is well marked by having the petioles and under
surface of the leaves densely covered with hairs. The variety is
characterized by having a "fulvous pubescence," but the 18
specimens at hand show the color of the pubescence on both young
and mature specimens to range from white to fulvous. The leaves of
all specimens at hand are 5-lobed and show a variation of leaves
with petioles and under surface of leaves densely pubescent to those
with petioles glabrous and with densely pubescent under surface.
The habitat is that of a dry soil and associated with beech. It has
been found in Gibson, Martin, Perry, Posey and Vanderburgh
counties.
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